Whole Foods CEO John Mackey and “Conscious Capitalism” – putting lipstick on a pig

John Mackey is the co-CEO of Whole Foods Market, its founder, and a self-proclaimed independent libertarian. Mackey has also recently authored a book, “Conscious Capitalism.” While he speaks in platitudes about corporations acting as conscientious citizens of the world, Mackey’s actions as CEO of a major corporation betray his real motivation.

Mackey was forced to back pedal from his comments on the Patient Affordable Care Act (“Obamacare”):

Technically speaking, it’s more like fascism. Socialism is where the government owns the means of production. In fascism, the government doesn’t own the means of production, but they do control it — and that’s what’s happening with our health care programs and these reforms.

Mackey is dead wrong on the government-corporate relationship under fascism. Italian historian and fascism authority Emilio Gentile gives the authoritative description:

Corporative organization of the economy that suppresses trade union liberty, broadens the sphere of state intervention, and seeks to achieve, by principles of technocracy and solidarity, the collaboration of the ‘productive sectors’ under control of the regime, to achieve its goals of power, yet preserving private property and class divisions. (Payne, Stanley G (A History of Fascism, 1914-1945). University of Wisconsin Press. pp. 5–6)

More importantly, it is time to call Mackey’s vision of capitalism (and Whole Foods Market) what it is, and this writer does not use this term loosely. “Corporate fascism” is an accurate and apt description of the Mackey philosophy. Consider Gentile’s definition. above, in light of Mackey’s actions and writings.

Mackey is a staunch proponent of a corporate-centric economy, with no government or regulatory intervention. Both Whole Foods Market and Mackey are anti-union, anti-worker’s rights. The Mackey philosophy would see a collaborative corporate control over the means of production, to achieve its own goals of power through corporate solidarity (WMC, US Chamber of Commerce, etc.). Preservation of private property and class division are a necessity for the Mackey vision, as there can be no cheap labor production without class division. Ironically, Mackey is a proponent of the expansion of state intervention, as long as it is on behalf of corporate welfare expansion. There is plenty of proof to support this assertion…

On November 16, 2011, Mackey penned an op-ed by invitation in the Wall Street Journal, titled “To Increase Jobs, Increase Economic Freedom.”  In a response to Mackey’s article written on February 1, 2012, Badger Democracy addressed the fundamental arguments in the op-ed:

1. Cut the size and cost of government – 100 years ago, government spending was 8% of GDP; today it is 40% of GDP. This additional money spent by the government could be used to “create jobs.”

2. Cuts should be made in Social Security, Medicare, Medicaid, and Defense – many of these services could be privatized, using the “success” of Chile and Singapore as models.

3. Stimulate the economy by cutting taxes and regulations – Mackey explains that cutting taxes would “increase revenue… as entrepreneurs create new businesses and new jobs and as people earn more money.”

In his own op-ed, Mackey supports further provisions which would continue the US economy down a dangerous path. Greater corporate consolidation of power, greater consolidation of wealth, greater class inequity, and greater corporate influence on policy which would regulate said power.

The dagger in Mackey’s theory is a recent report in the conservative-leaning Financial Times, also reported in the New York Times. The article cites a steady decline in earned wages and a steady rise in investor income through profit and interest:

“58%…is the share of US national income that goes to workers as wages rather than to investors as profits and interest. It has fallen to its lowest level since records began after the second world war and is part of the reason why incomes at the top – which tend to be earned from capital – have risen so much. If wages were at their postwar average share of 63 per cent, workers would earn an extra $740 billion this year, about $5,000 per worker, according to FT calculations.”

More power and wealth for the corporate fascists, with less taxes and accountability means more money to influence and drive politics and policy:

 

Corporate Taxes Paid by US Corporations, 1950-2010

(Federal Reserve Bank of St. Louis analysis)

Corporate income tax graph

 

Cheap labor production is possible due to the expansion of the wealth gap and class disparities:

 

 

John Mackey’s Whole Foods Market has also forced employees to “vote” to cut their own wages and benefits. Wages have been cut due to reduction in hours, and employees will be forced to contribute more in spite of enormous corporate growth:

In 2007, WFM profits (after taxes and expenses) totaled $182.7 million. Four years later, in 2011, profits totaled $342.6 million – nearly double in 4 years.  For the first sixteen weeks of 2011, total profits were $88.7 million; for the same period in 2012, profits totaled $118.3 million. Store expenses have decreased by 38 points in 2011, including 28 points due to wage cuts. In real numbers, most stores have executed 3% cuts in labor over the past fiscal year, resulting in most employees seeing a 5-8% cut in wages (due to hours being cut).

Of course, Mackey built Whole Foods with his own two hands, with no government help (sarcasm)…therefore, government should stay out of his business. This is the great lie of corporate fascism. Mackey and his ilk want the government to work for them. The doctrine of so-called “corporate conscious” follows in the words of Gentile:

…broadens the sphere of state intervention, and seeks to achieve, by principles of technocracy and solidarity, the collaboration of the ‘productive sectors’ under control of the regime, to achieve its goals of power.

The corporate fascists would have us believe the great lie of their own self-determination and success, that personal strength and sacrifice alone built their empires. Mackey is as guilty of this as any of them. Whole Foods is a prolific recipient of government intervention and welfare on its own behalf.

In 2011, an $8 million tax break for a new Washington DC Whole Foods development raised questions of return on public investment and why public money was even needed:

And why does this project require a special subsidy to move forward in the first place?  This Whole Foods already would qualify for a set of tax incentives for grocery store development, including a 10–year property tax break on the store itself.  Moreover, while some projects near Nationals Park have languished in the recession, this area is likely to be part of the emerging rebound, thanks in part to prior public investment by the District.  Finally, if a Whole Foods will revitalize this neighborhood as it did in Logan Circle, why won’t private market interests step up to make it happen?

In the same year, Whole Foods received $4.2 million in tax subsidies to open a Detroit area store, uncovered only by FOIA requests:

The documents, obtained by the Chaldean News under the Freedom of Information Act and provided toCrain’s, show that Whole Foods is asking for $4.2 million in city, state and federal incentives to open a store in downtown Detroit.

According to the exchanges, the 21,000-square-foot project is expected to get $1.5 million in local and community foundation funds, $1.2 million in federal tax credits under the New Market program and $1.5 million in state incentives.

Michael Sarafa, president of the Bank of Michigan and co-publisher of The Chaldean News, questions the use of incentives to lure a national grocery chain to Detroit. He said there are 83 independently-owned grocers in the city, many of them owned by Chaldeans, who did not receive incentives.

 

Controversial “TIF” funds are being used for construction of a Whole Foods-anchored development in St. Louis, hardly in a blighted area.

The new Whole Foods development in the Hyde Park neighborhood of Chicago is being partially funded by an $11.3 million “TIF” in an already well-developed area.

Mackey is now on the record confirming that Whole Foods will begin eliminating full-time employees as a result of “Obamacare” being fully enacted. This in an interview with Greta Van Susteren:

…there will be a strong temptation for businesses to keep people under 30 hours, so they don’t have to provide health care. And you will have a lot of part-time workers and fewer full-time workers, a lot of people underemployed.

Whole Foods prided itself, we’ve always had a higher mix of full-time to part-time workers like 80 percent full-time and 20 percent part-time, which is very rare in retail. But as I suspect as our health care costs are driven up by health care reforms then we’ll end up gradually lower our full-time ratio to a much lower number.

There is no fiscal truth to this statement. As proven in Whole Foods’ own financial statements and a previous Badger Democracy blog, the company’s health care costs per employee are actually lower than they were before “Obamacare’s” passage. The reason for Whole Foods’ higher total costs is simple – the company is growing. With government and public help.

It is time to take the lipstick off the pig. The philosophy of John Mackey should be called what it is. Corporate freedom, rights, and independence over all – even the individual. No worker’s rights, no government regulation or intervention EXCEPT on behalf of the corporation and its own interests. In short…corporate fascism.

And Mackey calling “Obamacare” fascism? Pure projection.

 

Expect more of the same from Scott Walker on Health Insurance Exchange Plan

If there was ever a time for Scott Walker to prove he is willing to work with “both sides of the aisle,” tomorrow is the day. Friday, November 16 is the deadline for states to announce their plan to implement state-run exchanges, or face implementation of a Federal Exchange. Walker and other GOP Governors went all-in on a Romney win, and subsequent repeal of the Affordable Care Act (ACA).  

Romney lost. “Obamacare” was declared constitutional. Don’t expect anything from Scott Walker – except business as usual.

Once again, Scott Walker and the extreme far-right GOP Legislators are choosing ideology over good governing, and it is the majority of Wisconsin taxpayers who will pay. Sadly, it didn’t have to be this way. The structure of an exchange has been in existence for over one year.

On November 1, 2011 State Senator Kathleen Vinehout (D-Alma) introduced 2011 SB 273 “Badger Health Benefit Authority.”  From the Legislative Fiscal Bureau analysis:

This bill creates the Badger Health Benefit Authority (authority) that is a public body corporate and politic that is created by state law but that is not a state agency.

Under the bill, the authority must establish and operate a Wisconsin Health Benefit Exchange in this state, must make qualified health plans, with effective dates on or before January 1, 2014, available to qualified individuals and qualified employers, and must seek federal grants and other funding for the purpose of the exchange. A qualified health plan is defined in the bill, generally, as a health benefit plan that covers the costs of health care services and that meets the certification criteria described in the federal Patient Protection and Affordable Care Act (PPACA).

In the past, Legislators from both side of the aisle would have spent the year hammering out an Exchange unique to, and to the benefit of Wisconsin. This is how Badger Care came into existence. Not today.

Enter the ideological crusaders. So extreme are these ideologues, nine of them have gone on public record as promoting legislation authorizing the arrest of any Federal Employee who would attempt to enact ACA in Wisconsin – including a Health Exchange.

Rep. Chris Kapenga (R-Delafield), Sen. Mary Lazich of New Berlin; Reps. Don Pridemore of Hartford; Erik Severson of Star Prairie; Tom Larson of Colfax; Scott Krug of Wisconsin Rapids; and three Republicans elected for the first time last week who will be sworn in early next year – Rob Hutton of Brookfield, Mark Born of Beaver Dam and Dave Murphy of Greenville. (MJS)

These are not responsible legislators. They are hacks.

Citizen Action of Wisconsin recently released an email from DHS to Walker Administration officials containing a Power Point presentation – the closest thing we have seen to a blueprint from the Governor’s office.

We can be certain of one thing. The Walker plan for a Health Exchange will be consistent with his previous governing record. The WEDC Block Grant fiasco, the current Talgo breach of contract lawsuit, cronyism in Administration appointments and State Agencies, and corporate patronage at the expense of fiscal responsibility are now the hallmarks of the Walker Administration.

The Walker plan for a Health Exchange will be nothing more than a sub-contracted, privately operated online market “clearinghouse” serving existing for-profit insurance companies – and doing nothing to reduce costs or increase access to the nearly 500,000 uninsured Wisconsinites.

The result will be the same as well – a giant boondoggle which will set up a significant battle with the Federal Government over whether the Wisconsin Exchange conforms to the ACA. And we all will lose.

Scott Walker will again live up to our expectations of him, which are continually decreasing.

WMC has the corporate solution to health insurance costs…just drop employees

Two high-level executives at separate Wisconsin Manufacturers and Commerce (WMC) member corporations have informed Badger Democracy of a quiet conspiracy within its membership. According to the executives, WMC is promoting a policy which would have private employers completely drop any employer-paid insurance programs by 2014 – forcing employees into (at the moment) non-existent exchanges in Wisconsin.

Rumors of such an action by employers have been circulating since early 2012.   A May 2012 report from Fox News questioned the ethics, and points out the politics of such an action:

A new survey of Fortune 100 companies finds that the health care overhaul, contrary to the claims of its authors, created some perverse incentives for employers to drop workers from company insurance plans…

“The penalties for the employers who drop coverage are very low, and the subsidies for the workers in the exchanges are very high,” said James Capretta, with the Ethics and Public Policy Center.

If the companies indeed take this step, the move would fly in the face of pledges by the law’s backers, including President Obama, that U.S. workers would not lose their employer-provided health plans.

The Fortune 100 “study” by the partisan Republican House Ways and Means Committee published in May, 2012 ignores the net effect of ACA to control health care costs. Two veteran health economists, David Cutler of Harvard and Karen Davis, president of the Commonwealth Fund, have calculated that over the first decade of Obamacare total spending on health care, in part by employers, will be half a trillion dollars lower than under the status quo.

The  House Ways and Means “study” cites no facts to support these cost increases. It merely cites a survey based on the beliefs of the conservative National Federation of Independent Businesses about what they think the impact of the ACA will be:

Consistent with the findings of this report, a separate survey of benefits and human resources executives managing health care costs shows the vast majority of respondents—about 85 percent—said they expect health care costs to rise in the next five years as a result of the law. 68 percent said they plan to re-evaluate their benefits strategy to offset the law’s impacts.

The report ignores the economic reality of the ACA reported in non-partisan studies (i.e. Cutler/Davis above). Rather, the “study” focuses on rationalizing the action of large employers who would drop any employer-funded health plan. In complete ignorance of the economic consequences of such a cynical, political, and ethically challenged action; the US Chamber of Commerce also sounded a warning:

“Despite promises that the health reform law would build on the existing employer sponsored system, the [employer] mandate will in fact undermine it. It will be more affordable for employers to pay the penalty for not offering coverage than to offer coverage
itself. And so, ironically, the employer mandate incents employers to stop offering health care coverage.”

The economic repercussions of such an action would be severe – especially during the current recession. Just what is the cost to employers for health insurance benefits?

The March 2012 report from the Bureau of Labor Statistics breaks it down by the hour. “Employer costs for private industry workers averaged $2.34 per hour worked for insurance benefits (life, health, and disability insurance).” A year of 40 hour work weeks amounts to 2,080 hours per year. The average cost to employers, from BLS data, is $4,596.80. Let’s give corporations the benefit of the doubt – $5,000/year on average for health insurance premiums.

The savings is obvious. The ACA assessment per employee (over 30 employees) for employers who offer no health insurance is $2,000. The average employer would save $3,000/year for each employee (after the first 30) by dumping their health plan, and just paying the assessment.

The cost to the average employee (and the broader economy) would be devastating. A search on the US Government website for health insurance coverage in Wisconsin, based on a similar, employer-provided health plan; show the cost to the employee would be nearly double the cost to the employer. $7,800 in premiums, coupled with a $2,000 deductible…versus $5,000 in cost to the employer.

The following email was sent to WMC spokesman Jim Pugh on Friday AM, September 7:

Hi Jim,

Having spoken recently to a CEO/President of a WMC member corporation in Milwaukee, I was told by this person that WMC is advising its members that to avoid having to comply with the full scope of the Patient ACA in 2014; if the law still is in force, member corporations should drop its employee benefit regarding health insurance. This would force formerly covered employees into the exchange, and more expensive (for them) premiums.

Do you have any comment on this? I will be forwarding any response to the person who gave me the information for a response.
In the absence of a response, I will assume “no comment.”
No reply has been received as of this writing.
The motivation here is simple – ideology and greed. Many corporations (including those led by Badger Democracy sources) are profitable under the current scenario. Indeed, many of the largest are currently paying little to zero in taxes. As medical costs decrease, and the insured pool expands, those costs to the employer will continue to decline (as most non-partisan studies have reported). The motivation and ideology of profit is taking precedence over simple societal, human decency.

Any corporate entity or lobby which participates in this type of activity, which would be ruinous to a broader economy, should be vilified for the cynical ideologue they truly are. Wisconsin Manufacturers and Commerce, The US Chamber of Commerce, and any of its GOP lackeys are showing their true priorities – profit. At any cost.

Follow Badger Democracy for daily reports from Chicago, and the Chicago Teachers Union strike…starting with Monday night’s post!